I. Introduction
I.I Literature Review: Democracy and Corruption
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I. Introduction
In the last few years, political corruption has been a hot item in both Taiwan and Mainland China with the trial and conviction of numerous high level officials, like Liu Zhijun in China and Lin Yi-shih in Taiwan. Both cases clearly demonstrate the detrimental effects corruption can have on society. In the first case, the railway minister Liu Zhijun of the People’s Republic of China was sacked and sentenced to death this year. Misallocations of resources by him are judged to have caused the crash of a high-speed rail train in Wenzhou province in the same year, causing the deaths of 40 people.1 The second case concerns the sentencing of secretary-general of the Executive Yuan (the executive branch of the Taiwanese government) Lin Yi-shih. The official was convicted of demanding bribes from a construction company before allowing construction. This case shows how corruption brings about economic inefficiency and unfairness among other negative effects on society. But how do we interpret these reports when assessing the development of anti-corruption efforts? Are the governments’ anti-corruption efforts effective and are the bad guys increasingly getting caught? Or is the increase in reports on officials’ malpractices signifying that the actual corruption rate is going up?
I.I Literature Review: Democracy and Corruption
A large body of research, mostly based on data from third-wave democracies in the eighties, has indicated a relationship between corruption and democratization in the form of an inverted U-curve
1 Kaiman, Jonathan. "Liu Zhijun, China's Ex-railway Minister, Sentenced to Death for Corruption." The Guardian. 8 July 2013. Web. 8 November 2013.
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shaped trend.2 As countries democratize corruption levels tend to rise until they reach a certain modernization threshold after which the levels of official malfeasance start to decline. Campbell and Saha argue that “if democracy can work effectively then it will have an inherent tendency to inhibit corruption.”3One underlying argument of this relationship between a democratic political regime and corruption is the public choice explanation of competition in economic and political arenas. Scholars of the Cold War era have argued that heavy government intervention in the economy provides government officials with opportunities for lucrative rent-seeking behavior.4 Their studies were mostly implying authoritarian interventionism in the context of the Soviet Union. More recently, a study by Ades and Di Tella has shown that countries with industrial policies that promote ‘national champions’ have seemingly higher levels of corruption.5
Regarding the political arena, democratic competition is seen to inhibit corruption “since [politicians]
cannot capture high bribes and yet must suffer the externality costs of policies passed by their colleagues as well as corrupt behavior by bureaucrats, democratic politicians will be more likely than authoritarian leaders to pass anti-corruption policies and to ensure that they are enforced.”
This suggests a step away from a relationship between political regime type and corruption, and a step towards a more direct relationship between economic policy and corruption.
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2 Campbell, Neil, and Shrabani Saha."Corruption, Democracy and Asia-Pacific Countries." Journal of the Asia Pacific Economy 18.2 (2013): 290-303.
3 Campbell, Saha. (2013): 290.
4 Tullock, Gordon, “The Welfare Costs of Tariffs, Monopolies and Theft”, Western Economic Journal, 5 (1967): 224–32;
Krueger, Anne O., “The Political Economy of the Rent-seeking Society”, American Economic Review, 64 (1974): 291–303;
Bhagwati, Jagdish N. "Directly unproductive, profit-seeking (DUP) activities." The journal of political economy (1982): 988-1002.
5 Ades, Alberto, and Rafael Di Tella. "National Champions and Corruption: Some Unpleasant Interventionist Arithmetic." The Economic Journal 107.443 (1997): 1023-1042.
6 Montinola, Gabriella R., and Robert W. Jackman. "Sources of corruption: a cross-country study." British Journal of Political Science 32.1 (2002): 150.
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3 Especially the incentive of re-election is considered a mechanism through which political
competition reduces corruption.7
Montinola and Jackman add two more reasons why democratic competition reduces corruption.
First of all, democracies are associated with freedom of information and association that helps in the monitoring of public officials. Additionally, the “possible turnover of power in democracies implies that politicians cannot always credibly promise that particular laws and regulations will continue in the future. This minimizes the size of bribes that rent-seekers are willing to pay.”8
So in summary the current body of research claims that democracy inhibits corruption, because it implies economic and political competition and institutions that reduce incentives for corruption.
Additionally, democracies traditionally have freedom of information and association that will allow for more transparency.
I.II Literature Review: Modern China and Corruption
The abovementioned body of research assumes that democracy inhibits corruption in comparison to authoritarian governments like communist ones. More recently, with China’s rise appears a new, difficult to define, political regime type that distinguishes itself from traditional authoritarianism.
These days it is problematic to call the People’s Republic of China (hereafter referred to as the PRC) a traditional communist country. It has opened up to the capitalist world market and its government has shown a conscious effort in anti-corruption. As shown by regular media reports, China’s
corruption problems are very large in comparison to other advanced economies, and their war on corruption has not been easy.
7 Rasmusen, Eric, and J. Mark Ramseyer, “Cheap Bribes and the Corruption Ban: A Coordination Game Among Rational Legislators”, Public Choice, 78 (1994): 305–27.
8 Montinola, Jackman. (2002): 153.
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4 The political economy of China, however, is considerably different from that of other traditional authoritarian countries. We cannot assume that the Chinese Communist Party (hereafter referred to as the CCP) cannot successfully combat corruption without embracing democracy. Even without democracy, China does not lack competition in economic and political arenas. Since 1982, China has embraced capitalism and the world market. Although, there is no doubt that the CCP has a strong industrial policy that promotes ‘national champions’ like Sinopec and PetroChina, there are many private economic players that are slowly but surely growing, especially as credit becomes more available for private enterprises.
Additionally, although the CCP has the monopoly on political power in the People’s Republic of China (hereafter referred to as the PRC), there has been evidence of political competition inside the party between two ‘factions’ known as the princelings and the Communist Youth League,9
Finally, the previous conception that freedom of information is a right reserved for democracies seems to become less self-evident with the rise of online microblogging (Sina Weibo).
with Xi Jinping of the former being the current ‘victor’ and leader of the CCP.
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All of the above lead me to believe that the rise of new China brings some previous assumptions about democratization being a precondition for successful anti-corruption into question. The modern day context of corruption needs a reassessment.
Regardless of the CCP’s attempt to curb the dissemination of information through this internet age medium, one post on Weibo has the ability to reach millions of people before it gets deleted by the censors.
I.III Research Question
9 Li, Cheng. "The Battle for China's Top Nine Leadership Posts." The Washington Quarterly 35.1 (2012): 131-145.
10 "Micoblogs: Small Beginnings." The Economist 6 April 2013. Web. 18 Nov. 2013.
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5 In this preliminary study on corruption I aim to answer the following research question. Does the political regime type influence a country’s corruption context? With the latter I mean the framework of causes and curbs to corruption that are found in different countries. In order to do this I will put the cases of Taiwan, a democracy, and the PRC, a non-democracy in comparative perspective.
For both cases I will first provide an overview of the development of the causes and curbs of corruption through a literature study of the social and institutional developments in the trends of corruption in both countries. Then, I will analyze both cases’ contexts of causes and curbs of corruption using John S. T. Quah’s model for analyzing a country’s corruption context. Then I will place them into a comparative perspective in order to clearly show the differences and similarities of both cases.
With this method we will be able to identify the role of political regime type in both contexts.
I.IV Literature Review: Contexts of Corruption
If we want to assume a perspective less biased by political regime types we must first define
corruption and secondly adopt a framework that delineates the basic causes and curbs of corruption.
In this section I will shortly address both issues.
A definition often used is provided by Joseph S. Nye who says that corruption is “behavior which deviates from the normal duties of a public role because of private-regarding (family, close private clique), pecuniary or status gains; or violates rules against the exercise of certain types of private-regarding influence. This includes such behavior as bribery (use of rewards to pervert the judgment of a person in a position of trust); nepotism (bestowal of patronage by reason of ascriptive
relationship rather than merit; and misappropriation (illegal appropriation of public resources for
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Another definition used mainly to categorize abuse of office by public officials is by Kenneth Gibbons. He lists the following abuses of office:
This definition clearly outlines certain acts of corruption. Additionally, it emphasizes acting against deviations from the normal duties of a public role. This is one of the ways in which defining corruption is dependent on what are considered the normal duties of an official which will deviate between different countries, legal frameworks and government positions.
- “A civil servant gives a position in his office to a relative rather than a better-qualified applicant. (Nepotism)”
- “A political party wins an election and then removes all office-holders who supported the opposition party. (Patronage)”
- “A legislator owns stock in a mining company, and votes for a bill which will give tax concessions to the company. (Legislative conflict of interest).”12
Heidenheimer adds the following to this list. “Awarding of government contracts to favored friends or political supporters, lying to the media and the public, and many forms of campaign finance.”13
These definitions provide a clear overview of the different manifestations of corruption. I’ve listed them for the purpose of providing more insight in these. John S.T. Quah uses the following definition in his work.14 It is based on the United Nations Development Program’s definition: “the misuse of public power, office or authority for private benefit – through bribery, extortion, influence peddling, nepotism, fraud, speed money or embezzlement.”15
11 Nye, Joseph S. “Corruption and Political Development: A Cost-Benefit Analysis.” The American Political Science Review 61.2 (1967): 419.
Quah adds the words “or private” to
12 Adapted from: Gibbons, Kenneth M. "Variations in attitudes toward corruption in Canada." Political Corruption. A handbook. Ed, Heidenheimer, A. J., and Michael Johnston. New Brunswick , 1989. 779.
13 Heidenheimer, A. J., and Michael Johnston. Political Corruption: Concepts and Contexts. New Brunswick, 2002. 27.
14 Quah, Jon S. T. Curbing corruption in Asian countries: An Impossible Dream?. Singapore: Emerald Group Publishing, 2011.10.
15 United Nations Development Programme. Fighting Corruption to Improve Governance. New York, 1999. 7.
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the definition, thus: “the misuse of public or private power”.16In addition to this definition there are two more dimensions that we must explore in our assessment of corruption. These can be embodied in two questions. First, “is corruption a fact of life or a way of life?”
This has the advantage of being able to include private abuse of power in his research. However, for the purpose of simplicity it is best to use the definitions of corruption offenses in legal terms in our cases of Taiwan and the PRC. These will be addressed later in the text.
17 The first kind takes place in a country where the rule and authority of the law is
established. The second kind is found in a country where the rule of law is not yet firmly founded.18 The second question is the following: “is corruption grand or petty in nature?”19 “Grand corruption refers to corruption by political leaders and senior civil servants and usually involves large
international bribes and hidden overseas bank accounts. […] On the contrary, petty or ‘survival’
corruption is practiced by underpaid junior civil servants who demand bribes from the people to expedite their applications or perform other favors.”20
For our assessment framework it is important to establish the factors that will provide political leaders, civil servants, and bureaucrats with strong incentives to commit acts of corruption. It is equally important to establish how to dispel these incentives using institutional measures. This is
It is important to note that, although grand corruption is more destructive in general, both are extremely disruptive to society and any anti-corruption effort can only be deemed successful if it can tackle both forms of anti-corruption at the same time. For this research I prefer to use a different terminology for this distinction, namely need-driven and greed-need-driven corruption. These are more self-explanatory.
16 Quah.(2011): 10.
17 Quah.(2011): 10.
18 Lovell, David W. “Corruption as a Transitional Phenomenon: Understanding Endemic Corruption in Post-Communist States.” Corruption. Anthropological Perspectives. Ed. Haller, Dieter and Chris Shore. London, 2005. 79.
19 Quah. (2011): 10.
20 Ibid.: 10-11.
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8 what I will refer to as the causes and curbs on corruption in the rest of the text, otherwise known as the contexts of corruption.
First we will discuss the causes of corruption. Leslie Palmier has identified three of these factors, namely: opportunities, salaries and policing. 21 The balance between these factors can have a significant effect on the political economy of corruption in a country. Countries with few opportunities for corruption, good salaries and effective enforcement of anti-corruption laws normally have minimal corruption. Therefore, according to Palmier, “an effective anti-corruption strategy should reduce or remove the opportunities for corruption, raise the salaries of civil servants and political leaders, and ensure a high degree of policing.”22 In countries with many opportunities, low salaries and weak enforcement, corruption will be more substantive.23 Additionally, we will add
‘culture’ and ‘political will to genuinely tackle corruption’ as factors, as Quah does.24
The first factor contributing to corruption is relatively low civil servant salaries. In the public sector, wages are generally not as competitive as those in the private sector. In developing countries government officials have strong incentives to collect bribes in order to make ends meet.
Additionally, with low wages it becomes more difficult to recruit competent and qualified personnel.
Let’s discuss the factors of Quah’s model of the causes and curbs of corruption in more detail.
The second factor is opportunities for corruption and red tape. When the role of government expands into more sectors of society and the economy, generally the amount of opportunities for corruption increases. For example, when bureaucrats are put in charge of the administration of certain
regulations regarding the access to certain goods and services, the position can be abused to extract
21 Palmier, Leslie. The Control of Bureaucratic Corruption: Case Studies in Asia. (New Delhi, 1985): 271-272.
22 Quah. (2011): 14.
23 Palmier. (1985): 272.
24 Quah. (2011): 20-22.
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9 rents from those seeking these goods or services. Regarding these opportunities Warwick25
The third factor is the risk of detection and punishment of corrupt practices. Corruption thrives when it is perceived as a low risk, high reward activity.
distinguishes ‘wet’ and ‘dry’ government agencies. ‘Wet’ agencies are in direct contact with the public, like customs or police departments. Working in this kind of agency provides more opportunities for corruption than ‘dry’ agencies which are more office based, like research and administrative
departments. Additionally, government ‘red tape’ provides opportunities to provide expedition or delays to government application procedures.
26 Additionally, in some countries, arrested officials are able to interfere with the investigation by soliciting the influence of their protectors in the hierarchy.
The perception of the risk is highly influenced by the exposure of corruption by mass media. The following quote by Singapore’s former Prime Minister explains the power of public opinion on the corruption risk perception very eloquently: “[..] the strongest deterrent is in a public opinion which censures and condemns corrupt persons, in other words, in attitudes which make corruption so unacceptable that the stigma of corruption cannot be washed away by serving a prison sentence.”27
Fourth, we need to take cultural factors in account when assessing corruption. For example, in many East-Asian countries the tradition of gift giving can often not be distinguished from bribery. These traditions can be so strongly ingrained in the customs of the inhabitants of a country that bribery is not even perceived as corruption.
A more objective method is the amount of corruption cases that make it to court in comparison to the amount of guilty verdicts.
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25 Warwick, Donald P. “The Effectiveness of the Indonesian Civil Service.” Southeast Asian Journal of Social Science. 15.2 (1987): 43.
Another example is the culture of ‘amoral familism’, a term
26 Quah. (2011): 18-19.
27 Straits Times. January 27, 1987: 11.
28 Quah. (2011): 21.
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Our final factor causing corruption is a lack of genuine political will to tackle the problem. This is most likely caused by corrupt, senior officials approaching the end of their careers at the top levels of government. “If a country’s political leaders are not committed to fighting corruption this lack of commitment will be reflected in the absence of comprehensive anti-corruption legislation, and the anti-corruption agencies’ inadequate budget and personnel.”
In cultures with this tradition the family is more important than the rest of society. This encourages deviance from universalistic norms, because advancing your family’s interests goes above the interests of society as a whole. This factor is deeply ingrained in some societies and is very hard to reverse and will likely take multiple generations to change substantially.
In our comparison we will mostly use the cultural factor as a control variable. We assume that the cultures of Taiwan and the PRC are relatively similar in terms of their influence on corruption contexts. However, it must be noted that there are most likely subtle and significant differences to be explored that are beyond the scale of this study. I want to stress culture’s importance although we downplay it in this text to highlight other factors.
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The second part of Quah’s model for corruption contexts are the different manifestations of anti-corruption measures. He posits three distinct patterns of anti-corruption control as employed in Asia-Pacific countries and they are based on combinations of anti-corruption laws and anti-corruption agencies (hereafter referred to as ACAs).
The political will of the leadership is additionally reflected by the reforms they put in place. Are they aimed at cracking down on
corruption in the short term or do they consist of reforms aimed at bringing about long-term improvement?
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29 Banfield, E. C. The Moral Basis of a Backward Society. New York, 1958.
The first pattern is found in countries with
anti-corruption legislation, but no ACA for the implementation of those laws. An example was Mongolia
30 Quah. (2011): 22.
31 Quah. (2011): 25-29.
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11 before the launch of its special ACA in 2006. It had a law on Anti-Corruption and three provisions making bribery illegal. The task of upholding these laws fell solely on the General Prosecutor’s Office and the courts.
The second pattern involves anti-corruption legislation and multiple ACAs. Having multiple ACAs has negative effects on their efficiency. Sadly, in many cases there is overlap in jurisdiction and even
The second pattern involves anti-corruption legislation and multiple ACAs. Having multiple ACAs has negative effects on their efficiency. Sadly, in many cases there is overlap in jurisdiction and even